Meralco defends 7 power supply deals as above board

By Myrna M. Velasco – July 4, 2017, 10:01 PM

from Manila Bulletin

Power utility giant Manila Electric Company (Meralco) has defended itself before a Congressional hearing yesterday that the seven power supply agreements (PSAs) it entered into without the benefit of competitive selection process (CSP) or bidding are in no way considered “midnight deals.”

The CSP process is an auction system prescribed for distribution utilities (DUs) on their contracting of power supply, as a matter of government policy.

But given the stretched deadline on the enforcement of the policy from November, 2015 to April, 2016, the company was able to execute the contracts without yet going through the mandated competitive selection process.

“Meralco categorically denies that these PSAs were ‘midnight contracts’ and will result in costlier and dirtier energy from coal,” the company has noted.

In cementing these off-take deals, including with its affiliate power generation companies (i.e. Meralco PowerGen and Global Business Power Corporation), the utility firm argued “these PSAs were legally filed in accordance with the rules and regulations of the ERC (Energy Regulatory Commission) with the objective of ensuring adequate and reliable power supply at ‘least cost’ to Meralco’s more than 6.0 million customers.”

During the Congressional hearing, ERC Commissioner Gloria Yap-Taruc indicated that hearings have already been undertaken on the respective PSA applications, but motions for intervention were belatedly filed when the cases were already submitted for resolution.

A question that had been raised on the floor then would be if such motions for intervention were lodged a bit late, would the ERC not anymore accord the parties the right to be heard especially if these are cases that would have immense impact on the consumers.

Yap-Taruc said the Commission may still consider such motions if they would “find merit in the opposition” being manifested by concerned parties.

Meanwhile, Meralco further noted that “each of the PSAs had undergone a very rigorous, lengthy and at times, contentious negotiation process with the generation companies which actually took many months and years before these agreements were signed and filed with the ERC.”

Lawyer William S. Pamintuan, Meralco first vice president and head of legal and corporate governance, cited that in fact, negotiations on one of the contracts “started way back in 2012 and was only concluded and signed in 2016.”

He thus reiterated that “there is absolutely no factual basis to claim that these are ‘midnight contracts’,” adding that there are actually more than 90 PSAs filed with the ERC that had been CSP-exempt, so the company decries why it is being singled out.

“Meralco negotiated these PSAs in utmost good faith and the resulting rates and other terms and conditions that were filed before the ERC are very competitive and favorable to consumers,” he stressed.